The Royal Dutch/Shell Group's former chairman, Sir Philip Watts, received a severance package worth £1.06 million (US$1.93 million), the amount he would have earned had he stayed on until retirement, the company said on Friday.
Watts was asked to step down in March, after an internal investigation found that the company had overstated its oil and gas reserves estimates for several years.
He was the head of exploration and production, the division in charge of reserves, from 1997 to 2000, when much of the overbooking occurred.
Watts, who turned 59 on Friday, had been scheduled to retire in June next year.
Shell said Friday that Watts received the payment, rather than three months of salary, a more standard severance agreement in Britain, because he resigned from his post by mutual agreement with Shell's board rather than being forced out.
The severance package is in addition to a pension of £584,000 (US$1.06 million) a year.
Last year, he was awarded 1.165 million stock options, worth £582,500 if they were exercised at Friday's closing price, and a salary of £843,000 (US$1.5 million).
Some investor groups said the severance payment was a clear sign that shareholder rights were still too weak.
"We think that shareholders need the power to specifically approve or reject these termination packages," said David Somerlinck, corporate governance policy manager at Pensions Investment Research Consultants, a London firm that represents institutional shareholders.
Last year, the British government weighed legislation that would give investors the power to vote down rich severance packages, but the bill was not approved.
Shell should have awarded Watts three months of pay, the minimum allowed under his contract, Somerlinck said.
Shell is facing several class-action lawsuits and investigations related to its reserves estimates that could cut into earnings this year or next.
Regulators, including the Securities and Exchange Commission and the US Department of Justice in particular, may impose hefty fines, analysts say.
The company first cut its proven reserve estimates by 20 percent in January, then trimmed them three more times.
Tomorrow, Shell's directors and managers will face shareholders for the first time at two separate annual general meetings in London and Amsterdam.
Attendance is expected to be high, and small shareholders in particular are likely to use the forum to criticize Shell's corporate governance.
In response to an investor outcry after the reserve estimates were cut in January, Shell has agreed to rethink its unique dual-board structure.
Investors are anxious to be part of any revamping of the company.
Some investor groups have already put forward specific proposals about the issue that may be addressed at Monday's meetings.
The California Public Employees' Retirement System, or Calpers, and Knight Vinke Asset Management will ask Shell to include two outside investor representatives in their review process.
"We're not looking for confrontation for confrontation's sake," said Lucy Butler, a spokeswoman for the Association of British Insurers.
The group would just like to make sure that Shell is communicating with shareholders about any changes, she added.
Shell also said on Friday that the expiration date for 2,847,000 stock options Watts has outstanding had been moved up. The last of the options now expire in March 2009, rather than March 2013.
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